My employer said it would pay me $X/hour, however it only paid me a fraction of that amount. It gave the difference to the IRS.
Does my employer owe me money? Or is there an unwritten clause in my employment contract that says that even though the contract clearly states that I will be paid $X/hour, my employer really only owes me the fraction of $X/hour that remains after various governments extort a portion of that $X/hour from it?
And what about the money that I can get from the IRS by filing a 1040 form? The IRS says it is money that it owes me because it took too much money from my employer for the income taxes that it claims I owe it. But I don't really owe the IRS any money, so should this money just be seen as free money that the IRS happens to give me or should it be seen as restitution for my employer that my employer then pays to me in fulfillment of another unwritten clause in my employment contract?
I'm finding it difficult to determine what exactly is going on in this situation and how to analyze it from a libertarian perspective. I think it's important to get a good clear understanding of this situation so that we can better understand why taxation is aggression and whom taxation is aggression against. I would be very grateful if someone helped explain the situation to me.
I'm also ignorant of what happened between my employer and the government before my employer hired me. My employer is "________, Inc." How did this legal entity get set up? Is this relevant to the analysis of the taxation situation?
Also, I presume that the government issues threats of the form "Hey employer, give us a portion of the money that you pay your employees or else we'll [insert punishment here]," because my employer wouldn't give its money away to the IRS unless it was faced with this threat. However, I do not know the details of this threat. Can someone explain it? What motivates my employer to give the IRS or the state government any tax money at all? What does the law say? What is the specific threat the government makes?
Thank you in advance for sharing your knowledge with me. I have learned a lot from the people on this forum already.
Taxation is a cost imposed by government. It's inherently inflationary. It makes us all poorer. In a free market, your wages would be determined entirely by the market. They would probably be lower in nominal terms but much higher in real terms.
It also diverts value away from productive purposes, misallocates resources, etc. It's just a mess.
This question assumes your tax is withheld, which was not always the case and, I believe, you can opt out of when you're hired. Otherwise, come April, you write a check to the IRS for the income tax they say you owe them. And this is obviously the case if you're self-employed.
But then there is FICA, which is withheld from an employee's check. Though half of FICA is the "employer's contribution," the tax ultimately falls on you. The employer doesn't care what pre-tax salary you see on your paycheck; he cares how much your employment costs him. If, say, your salary is $50k, while FICA means your boss is actually paying $52k, you could presumably bid up your salary to $52k should FICA be eliminated.
It's understood when you negotiate with your employer for a job that they will succumb to the state's extortion with regards to your salary - this is implicit within your contract and wholely predictable before hand, so your complaint that they owe you money is unfounded. As far as the state is concerned, whether they owe or do not owe you anything is wholely irrelevant. They are a criminal organization, unbound by the laws they impose on us. They do not owe you anything and you do not owe them anything. They have no claim on the wealth they possess. If you can get anything from them, that's great, because that property is presently unowned. How you acquire it is irrelevant. Conversely, they will take from you constantly, and you will have no recourse against whatever theft they have decided is legal.
... just as the State
has no money of its own, so it has no power of its own - Albert Jay Nock
I'm not sure if your questions were answered or if you are still reading your post.
Your employer chose to open a corporation and registered it with the state and was given an EIN (employer identification tax number) which according to the state allows him to be an employer and obligates him to withhold taxes by their definition. Most likely he chose the cortoprate entity for liability protection and some possible tax advantages to him and the shareholders. He could also have chosen to operate as a sole proprietor or a partnership, which changes the legal implications but not the tax issue.
He agrees to withold your portion of taxes because the state holds a gun to his head telling him to do it.
Your actual salary is in fact what he promised to pay you PLUS the portion of withholdings that supposedly is contributed by the "employer"
The state decrees that the emplyee must withhold a certain percentage for income tax and a ceretain percentage for other fees like SSI and Fica
and that the employer is supposed to "match" some of these taxes out of his own pocket. The truth is your productivity pays for all of these portions. None of it is paid by the employer because if your productivity was not enough to do your job and cover the additional expenses you incur- taxes, benefits etc.- he would not hire you. So in fact your salary is slightly higher than the $X per hour you think of. So this is all "your " money. If for instance the employer does not pay the IRS from your paycheck, and does not refund the difference to you, he may have violated some law, but he really stole from you.
There are ways that you can avoid these withholdings, for instance by claiming to not be an employee but a private contractor. This would relieve your employer of the duty of witholding your taxes and put it back on your shoulders alone. You would be responsible for submitting the income taxes yourself plus both the emoployee and employer factions of the previous withholding taxes. They will call it "self employment taxes" Of course you may choose to pay all or some or none of this and deal with the jack-booted-thugs yourself.
You may think of this portion of your salary as extorted or invested or wasted or stolen or as bribery to stay out of jail, but at the end of the day, most people comply because the state has a monopoly on violence.